Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.
Should You Consider ON Semiconductor Corp.?
The final step today is to look at a stock that meets our ESP qualifications. ON Semiconductor Corp. (ON) earns a #3 (Hold) 20 days from its next quarterly earnings release on November 2, 2026, and its Most Accurate Estimate comes in at $0.92 a share.
By taking the percentage difference between the $0.92 Most Accurate Estimate and the $0.87 Zacks Consensus Estimate, ON Semiconductor Corp. has an Earnings ESP of +5.20%. Investors should also know that ON is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
ON is just one of a large group of Computer and Technology stocks with a positive ESP figure. Affirm Holdings (AFRM) is another qualifying stock you may want to consider.
Slated to report earnings on November 5, 2026, Affirm Holdings holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.39 a share 23 days from its next quarterly update.
For Affirm Holdings, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.35 is +11.03%.
ON and AFRM's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
Should You Invest in ON Semiconductor Corporation (ON)?
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ON Semiconductor Corporation (ON): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).